3DfinancialplanningPWP DraftFinanceBill2014 web
FINANCE BILL 2014: DRAFT CLAUSES
3D Financial Planning 53a High Street, Reigate Surrey RH2 9AE [email protected] 01737 225989 www.3dfinancialplanning.co.uk 3D Financial Planning is appointed representative of the Best Practice IFA Group Limited which is authorised and regulated by the Financial Conduct Authority
FINANCE BILL 2014: DRAFT CLAUSES Following the recent Autumn Statement the draft clauses for next year’s Finance Bill have now been published. Here’s our summary of those draft clauses.
PERSONAL TAXATION As already announced, the personal allowance for the tax year 2014/15 will be £10,000. Had it been only increased to allow for inflation, it would only be £9,740. The basic rate band reduces to £31,865. This means that the point at which most taxpayers pay higher rate tax increases slightly from £41,450 to £41,865.
There are several changes to taxadvantaged share schemes for employees. The main changes are: •
•
•
it only benefits couples where one pays basic rate tax and the other has some unused personal allowance
•
the allowance is a maximum of £1,000
•
the maximum tax saving is £200
•
from 2016, this allowance will move in line with the personal allowance
•
this change does not affect taxpayers born before 6 April 1948, who may not claim the allowance
•
for employed taxpayers, the change will be made through the tax code
•
means tested benefits may be affected as these are based on after tax income
•
further provisions will be announced to explain what happens in the year of death, divorce or separation.
a 20% increase in free shares and partnership shares in a Share Incentive Plan (SIP) to £3,600 and £1,800 (or no more than 10% of an employee’s salary if lower) respectively
a new relief of £500 per employee per year is provided from autumn 2014 where the employer meets the cost of recommended medical treatment. The treatment must be recommended by the new Health and Work Service or by an occupational health service
•
doubling of maximum monthly investment under Save As You Earn (SAYE) schemes to £500
many of the percentages used to calculate car benefit are increased by one percentage point
•
where an employee makes a payment for using a company car or van to avoid a fuel benefit charge, that payment must be made before the end of the tax year in which the use was undertaken. This may require special provisions for private use towards the end of the tax year.
•
replacing HMRC approval with selfcertification for SIPs, SAYE schemes and Company Share Option Plans (CSOPs)
•
changes to the ‘purpose test’ for SIPs, SAYE and CSOP schemes
•
relaxation in some of the rules for unapproved employee share schemes.
From April 2015, a transferable tax allowance is introduced for married couples and civil partnerships. The main features are:
•
There are some other changes also designed to promote employee share ownership. Now may be a convenient opportunity to discuss such schemes with us. There is also a set of new tax reliefs when shares in a company are transferred to an employee ownership trust such that the trust has a controlling interest in the company. It is essential to ensure that any such transfer complies with the strict rules that apply. There are some other changes to employee benefits: •
the limit for beneficial loans doubles to £10,000 from April 2014
For capital gains tax, the main changes are: •
the final period exemption is reduced from 36 months to 18 months, with exceptions for some disabled people and those moving into care homes. This is designed to deter ‘flipping’ when an individual or couple has two or more homes
•
the annual exempt amount increases from £10,900 to £11,000.
There are changes to the capital gains tax and inheritance tax treatment of trusts for a vulnerable beneficiary. These changes reflect the replacement of disability living allowance with the new personal independence payment.
employment taxes being avoided by using offshore intermediaries
BUSINESS TAXATION
•
The existing rules are to be replaced by a less prescriptive ‘51% group test’.
•
By 2015, there will be a single rate of corporation tax of 20% (with a few exceptions such as for the oil industry).
Changes are made to film tax relief. The changes remove the ‘cliff edge’ between the two existing rates of relief and reduce the minimum UK spending requirement from 25% to 10%.
Legislation will also be introduced to deal with partnerships being used for tax avoidance, such as in a mixed partnership which has both individuals and companies as members.
Some of the anti-avoidance rules are amended as follows:
Action will be taken against dual contracts of employment by non-domiciles where the distinction between UK and non-UK work is artificial.
The introduction of a single rate means that the associated company rules will no longer be relevant in determining the rate of tax to be charged. However these rules are still needed for other purposes, such as: •
where there are ring-fenced profits
•
whether the company pays an effective lower rate under the patent box provisions
•
•
new provisions will seek to restrict transferring profits of a controlled foreign company out of the UK
•
new provisions will seek to prevent
traded on a growth market on or after 28 April 2014.
INVESTMENT •
stamp duty reserve tax is abolished for certain collective investment schemes from 30 March 2014
•
stamp duty and stamp duty reserve tax is abolished for eligible securities
there will be a relaxation in the restrictions of corporation tax loss relief on a change of ownership from 1 April 2014
•
determining capital allowances for long-life assets
Some small changes have been made to encourage particular types of investment:
analysing when a company must pay corporation tax by quarterly instalments.
A new innovative social investment tax relief is introduced for individuals who invest in social enterprises, subject to certain conditions. These are schemes where the government will pay according to how well a social objective is met, such as how low the re-offending rate is for a scheme designed to rehabilitate prisoners.
transfer pricing rules are amended to prevent exploitation for avoidance.
Where a tax avoidance scheme has been found by a court or tribunal to be ineffective, all taxpayers using that scheme will be required to pay the tax being avoided even if they continue their legal challenge. This will prevent schemes being used to generate a cashflow advantage.
As previously announced, the annual limit and lifetime limit for pension contributions reduce from April 2014. A new individual protection relief called IP14 is being introduced for taxpayers to protect an entitlement built up before 6 April 2014. The rules on venture capital trusts are amended to prevent exploitation of tax relief by using share buy-backs.
TRANSPORT
OTHER PROVISIONS
As widely expected, the planned increases in road fuel duty have been cancelled.
A charity that acquires land jointly with a non-charity may claim partial relief from stamp duty land tax in respect of its share of the land. This legislates for the Court of Appeal decision in two cases heard in 2013.
Other changes include: •
an option to pay the vehicle excise duty (road tax) by direct debit from 1 October 2014, and in monthly instalments, in addition to payment annually and biannually. The charge for nonannual payments also reduces from 10% to 5%
•
from 1 October 2014, the paper road tax disc will no longer be issued, thereby ending a practice that dates back to 1921. Instead the police and DVLA will rely wholly on the electronic version of the file
•
duty rates for heavy goods vehicles are being restructured.
Various betting and gaming duties will be amended so that they are charged on remote gambling operated outside the UK but where the gambler or user is based in the UK.
As ever with the Finance Bill it is only Royal Assent that formally enacts these changes. If there are areas of particular interest, please contact us.
3D Financial Planning 53a High Street, Reigate Surrey RH2 9AE [email protected] 01737 225989 www.3dfinancialplanning.co.uk 3D Financial Planning is appointed representative of the Best Practice IFA Group Limited which is authorised and regulated by the Financial Conduct Authority
FINANCE BILL 2014: DRAFT CLAUSES Following the recent Autumn Statement the draft clauses for next year’s Finance Bill have now been published. Here’s our summary of those draft clauses.
PERSONAL TAXATION As already announced, the personal allowance for the tax year 2014/15 will be £10,000. Had it been only increased to allow for inflation, it would only be £9,740. The basic rate band reduces to £31,865. This means that the point at which most taxpayers pay higher rate tax increases slightly from £41,450 to £41,865.
There are several changes to taxadvantaged share schemes for employees. The main changes are: •
•
•
it only benefits couples where one pays basic rate tax and the other has some unused personal allowance
•
the allowance is a maximum of £1,000
•
the maximum tax saving is £200
•
from 2016, this allowance will move in line with the personal allowance
•
this change does not affect taxpayers born before 6 April 1948, who may not claim the allowance
•
for employed taxpayers, the change will be made through the tax code
•
means tested benefits may be affected as these are based on after tax income
•
further provisions will be announced to explain what happens in the year of death, divorce or separation.
a 20% increase in free shares and partnership shares in a Share Incentive Plan (SIP) to £3,600 and £1,800 (or no more than 10% of an employee’s salary if lower) respectively
a new relief of £500 per employee per year is provided from autumn 2014 where the employer meets the cost of recommended medical treatment. The treatment must be recommended by the new Health and Work Service or by an occupational health service
•
doubling of maximum monthly investment under Save As You Earn (SAYE) schemes to £500
many of the percentages used to calculate car benefit are increased by one percentage point
•
where an employee makes a payment for using a company car or van to avoid a fuel benefit charge, that payment must be made before the end of the tax year in which the use was undertaken. This may require special provisions for private use towards the end of the tax year.
•
replacing HMRC approval with selfcertification for SIPs, SAYE schemes and Company Share Option Plans (CSOPs)
•
changes to the ‘purpose test’ for SIPs, SAYE and CSOP schemes
•
relaxation in some of the rules for unapproved employee share schemes.
From April 2015, a transferable tax allowance is introduced for married couples and civil partnerships. The main features are:
•
There are some other changes also designed to promote employee share ownership. Now may be a convenient opportunity to discuss such schemes with us. There is also a set of new tax reliefs when shares in a company are transferred to an employee ownership trust such that the trust has a controlling interest in the company. It is essential to ensure that any such transfer complies with the strict rules that apply. There are some other changes to employee benefits: •
the limit for beneficial loans doubles to £10,000 from April 2014
For capital gains tax, the main changes are: •
the final period exemption is reduced from 36 months to 18 months, with exceptions for some disabled people and those moving into care homes. This is designed to deter ‘flipping’ when an individual or couple has two or more homes
•
the annual exempt amount increases from £10,900 to £11,000.
There are changes to the capital gains tax and inheritance tax treatment of trusts for a vulnerable beneficiary. These changes reflect the replacement of disability living allowance with the new personal independence payment.
employment taxes being avoided by using offshore intermediaries
BUSINESS TAXATION
•
The existing rules are to be replaced by a less prescriptive ‘51% group test’.
•
By 2015, there will be a single rate of corporation tax of 20% (with a few exceptions such as for the oil industry).
Changes are made to film tax relief. The changes remove the ‘cliff edge’ between the two existing rates of relief and reduce the minimum UK spending requirement from 25% to 10%.
Legislation will also be introduced to deal with partnerships being used for tax avoidance, such as in a mixed partnership which has both individuals and companies as members.
Some of the anti-avoidance rules are amended as follows:
Action will be taken against dual contracts of employment by non-domiciles where the distinction between UK and non-UK work is artificial.
The introduction of a single rate means that the associated company rules will no longer be relevant in determining the rate of tax to be charged. However these rules are still needed for other purposes, such as: •
where there are ring-fenced profits
•
whether the company pays an effective lower rate under the patent box provisions
•
•
new provisions will seek to restrict transferring profits of a controlled foreign company out of the UK
•
new provisions will seek to prevent
traded on a growth market on or after 28 April 2014.
INVESTMENT •
stamp duty reserve tax is abolished for certain collective investment schemes from 30 March 2014
•
stamp duty and stamp duty reserve tax is abolished for eligible securities
there will be a relaxation in the restrictions of corporation tax loss relief on a change of ownership from 1 April 2014
•
determining capital allowances for long-life assets
Some small changes have been made to encourage particular types of investment:
analysing when a company must pay corporation tax by quarterly instalments.
A new innovative social investment tax relief is introduced for individuals who invest in social enterprises, subject to certain conditions. These are schemes where the government will pay according to how well a social objective is met, such as how low the re-offending rate is for a scheme designed to rehabilitate prisoners.
transfer pricing rules are amended to prevent exploitation for avoidance.
Where a tax avoidance scheme has been found by a court or tribunal to be ineffective, all taxpayers using that scheme will be required to pay the tax being avoided even if they continue their legal challenge. This will prevent schemes being used to generate a cashflow advantage.
As previously announced, the annual limit and lifetime limit for pension contributions reduce from April 2014. A new individual protection relief called IP14 is being introduced for taxpayers to protect an entitlement built up before 6 April 2014. The rules on venture capital trusts are amended to prevent exploitation of tax relief by using share buy-backs.
TRANSPORT
OTHER PROVISIONS
As widely expected, the planned increases in road fuel duty have been cancelled.
A charity that acquires land jointly with a non-charity may claim partial relief from stamp duty land tax in respect of its share of the land. This legislates for the Court of Appeal decision in two cases heard in 2013.
Other changes include: •
an option to pay the vehicle excise duty (road tax) by direct debit from 1 October 2014, and in monthly instalments, in addition to payment annually and biannually. The charge for nonannual payments also reduces from 10% to 5%
•
from 1 October 2014, the paper road tax disc will no longer be issued, thereby ending a practice that dates back to 1921. Instead the police and DVLA will rely wholly on the electronic version of the file
•
duty rates for heavy goods vehicles are being restructured.
Various betting and gaming duties will be amended so that they are charged on remote gambling operated outside the UK but where the gambler or user is based in the UK.
As ever with the Finance Bill it is only Royal Assent that formally enacts these changes. If there are areas of particular interest, please contact us.
